The Indian blockade of Nepal (#IndiaBlockadesNepal) has been running for over three months now. Being landlocked, most of Nepal’s imports come via India. Although international laws provide landlocked countries the right to unrestricted passage to the sea, India has been unquestioned by the international community on the way it is putting an entire country of about 28 million in “ventilator support”, in the words of senior Indian journalist Anil Yadav. The blockade has created a humanitarian crisis, apart from economic and political ones.

By blockading Nepal, India is supporting a group of protesters in Central Terai of Nepal. The blockade has caused massive suffering to people all over the country. Economy has been destroyed and might take years to recover. Jobs have been lost, investors have pulled out, major infrastructure and development projects have been badly affected and put out-of-schedule, and education of millions of kids has been disrupted. Industries have closed because of lack of security and raw material supply. Vaccination programs have also been disrupted. This shows the scale of suffering Nepal is facing because of the inhumane blockade by India.

The Modi government, together with Indian bureaucrats, diplomats, and intelligence officers have especially taken a harsh position, advocating that India should continue to pressurize Nepal this way.

Below, we present a selection of pictures and tweets to illustrate some of the hardships Nepali people have been put through by the blockade on Nepal by its big southern neighbor India.

Blockade is killing people

Amit Yadav, a kid from Eastern Terai, died because he could not visit a hospital for monthly checkup. Amit happens to be Madhesi-origin. Transportation has halted, especially in Eastern Terai but also elsewhere because of the blockade by India and the protests in some parts of Nepal that it has strengthened.

The protesters have burnt several ambulances. The pictures in the tweet above show two vandalized ambulance. The first one was carrying a kid in critical condition, who died because of the protesters.

Earthquake victims have a harder time

Several earthquake victims have died this week due to cold. Earthquake victims cannot buy food, fuel, and construction material to build shelters because of the blockade. They are having to sleep outside. A harsh winter in the hills is worsening their condition. Nepal suffered two big earthquakes earlier this year, before India blockaded imports, making it almost impossible for relief to reach earthquake victims. Humanitarian organizations cannot operate under such lack of essentials.

Kids cannot study

Schools have been closed for months. In the Terai, school kids are used by protesters for violent protests and vandalism. Elsewhere, schools cannot operate because of lack of fuel and other essentials. The following placard reads “Live and let us study.”

Kids are collecting essentials for their families. In the following picture, they are carrying firewood as fuel has become scarce.

Picture: Sunil Pradhan – Anadolu Agency/Getty Images

Violence and vandalism strengthened by blockade

The blockade has strengthened and supported a violent protest going on in the Terai region of Nepal. Protesters attack journalists, police and ordinary citizens with Molotov Cocktails. Even Indian police has entered Nepali territory and fired at Nepali citizens and police.

A Madhesi lawmaker was attacked by the protesters. Several other political parties and people with differing opinion are regularly threatened and attacked in the protest areas. Protesters have almost banned political activities and campaigns by other parties. The President of Nepal was also humiliated and attacked by protesters.

Ordinary Madhesi are also suffering because of the Indian blockade that has strengthened a violent protest in the Terai region. In the first picture below, the protesters burnt a moterbike, along with its owner Dilip Chaudhary. The second picture shows Bablu Rajbanshi burnt by the protesters.

Human rights violation by police and protesters

The blockade has strengthened the violent protests, which has invited state police to safeguard highways and public property. Protest organizers have publicly provoked and called for violence and use of weapons. In retaliation, police action has sometimes been brutal and in violation of human rights. Several protesters and onlookers have been killed by police action. On the other hand, several police personnel and civilians have been attacked, lynched and killed by the protesters. The picture below shows a Madhesi family holding a picture of their dead son.

In the following pictures, this side of the gate is Nepal and the other side is India. Stones are being pelted on Nepal police personnel from the Indian side of the border. In the first picture, Indian security personnel are standing guard at the border, providing security to the attackers.

Lack of food and cooking fuel

There’s acute shortage of cooking gas and food supplies. Restaurants have modified their menu because of the blockade. Only limited items not requiring a lot of fuel are on offer in restaurants. Many are cooking on firewood. Several businesses have closed permanently, leaving many jobless during festival season and the ensuing winter.

Travel has become scary

Traveling has become very scary and deadly. There are much fewer buses running and most of them are packed beyond capacity. Protesters regularly vandalize passengers, buses and private property. Because of lack of fuel, traveling conditions are harsher than usual, resulting in increased accidents and added difficulty for the elderly, sick, women and children. Buses carry petrol in small cans, adding the risk of fire and death. As seen in the pictures, passengers including small kids are forced to travel with great risk on top of buses

Protesters emboldened by the Indian blockade regularly destroy buses plying in the Eastern Terai, in a gross violation of human rights. Almost all buses traveling there have damaged windows and windscreen. Many people have been injured and killed during the violence meted out against innocent travelers on highways. Buses often travel without any windscreen, making it extremely chilly and uncomfortable inside. Travel is possible only at night, and every night passengers are greeted with stones, Molotov cocktails and other objects thrown at them.

In this picture, an international cricketer of Nepal is seen at the arrival lounge of Nepal’s airport with an electric induction stove. He bought it while on a trip overseas. Those who can afford have switched to such electric heaters because cooking gas is no more available in the market.

Goodwill between neighbors is lost as younger generations witness Indian aggression

Indians are not at risk in Nepal. Nepalis have remained calm throughout the blockade and been sensible to separate the ordinary Indian people from their brutal and bully government.

But while previous generations faced several Indian blockades and harbored a generally hostile attitude towards Indian intentions in Nepal, the newer generations were more open and cosmopolitan in nature. Now that they have witnessed the Indian aggression at a very difficult time in their country’s history, the sense of optimism has suffered a great setback. People are very discouraged and this will reflect directly in the coming generations’ view of their big neighbor to the South. There have been several spontaneous protests and social media campaigns against the blockade both in Nepal and in the cities of Europe or USA with large Nepali diaspora.

Vulgar politics at display

The blockade has put to display Nepal’s own ugly sides. Nepal’s politics is messy, like in many similar countries. Here are some examples.

A professor defends the burning of ambulances and death of kids because of protesters blocking ambulances as needing to be seen “in a context”. This is very much reminiscent of how the violence unleashed by Maoist rebels during their insurgency was defended by its apologists.

Former Prime Minister and Maoist politician Baburam Bhattarai leads a group of so-called “civil society leaders”, which includes Dr Devendra Raj Pandey, CK Lal, Krishna Hachhethu, Pitambar Sharma etc. Bhattarai is a seasoned politician and the ideologue of the violent Maoist insurgency. He hardly fits the generally accepted definition of “civil society member”. But currently his cohort is cashing on the Indian blockade to revive his political career in the guise of a new political force. Bhattarai resigned from his parliamentary seat immediately after the promulgation of constitution, showing neglect to the people of his constituency, who are among the worst hit earthquake victims. He was also one of the leading politicians involved in the drafting of Constitution.

At other events, similar group of “civil society members” has gone so far as to say that Nepal is to be blamed for everything and India has imposed no blockade. This group includes the likes of Daman Nath Dhungana, Sundar Mani Dixit, CK Lal, Lokraj Baral. They were speaking at events organized by or in the presence of Indian Ambassador to Nepal, Mr. Ranjit Rae. Many in Nepal allege they work in tandem with the Indian bureaucracy and intelligence agencies to do a “narrative control” in Nepal. Perhaps, this is what observers meant while referring to the many “covert and overt” weapons India has at its disposal against Nepal ?

The level of disrespect and interference in Nepal’s internal politics by India has gone so far that the blockade started with India demanding changes to Nepal’s newly drafted constitution. This headline from Indian Express just before the blockade began.

While there is vehement denial of the blockade by Indian government, its operatives in Nepal and some of Nepal’s civil society members, enough evidence has been produced that show India is actively and directly forcing a blockade on Nepal. This is a picture of supply trucks queuing up at the Indian side of the border. Such queues stretch several kilometers and Indian security force selectively allow trucks to pass. Trucks carrying fuel are stopped on purpose. Indian journalist Anil Yadav produced a series of reports this month from a town near Nepal-India border.

The performance of Nepal’s own government has been very lackadaisical. A weak coalition cobbled up after the blockade apparently against India’s wishes, shows no creativity or initiative to make things easier for the people. Government ministers and the Prime Minister are frustrating the ordinary people with their rhetoric full of lofty dreams but no matching action. In all this, the opposition party sees an opportunity to replace the government formed just months ago.

The following cartoon published in a Nepali newspaper shows the Prime Minister busy talking, doing nothing.

Nepal’s total trade deficit in fiscal year 2014-15 surpassed the total annual budget presented for the same fiscal year, reports Republica.

The trade deficit rose by 10.8 percent to a whopping Rs 689.36 billion in the fiscal year 2014-15 compared to total fiscal budget of Rs 618 billion, according to the central bank’s report titled Current Macroeconomic Situation.

“The trade deficit increased in 2014/15 due to the increase in imports but decrease in exports,” the report states. Export to India and China dropped by 6.3 percent and 21.5 percent, respectively. This decrease is mainly attributed to the decrease in the exports of wheat flour, handicraft goods, agarbatti, pashmina, among others.

Nepal’s private sector, as evidences show, is shying away from its major responsibilities and becoming much like NGOs. The current situation is such that the private sector is acting like nonprofits or as a project implementing body. Popular perception is that our private sector lacks innovative approaches and entrepreneurial mindset.

Recently, me and my friend Hom Nath Gaire did a story on the recent trend of private sector engaging in appeasing donors for projects instead of being involved in businesses. I want the news to speak and help you readers make a judgment about our private sector:

A Donor-Dependent Private Sector

By Siromani Dhungana and Hom Nath Gaire

Aid orientation has been evident among Nepal’s private sector organizations as they are hell bent on bagging projects from donor agencies to carry out activities for their own welfare and day to day activities. Sometimes, their race for getting projects appears to be ‘unhealthy’.

Women entrepreneurs in Nepal have come far but they still have a long way to go. Women entrepreneurs are still waiting for a situation where they will get a chance of working as freely as their male counterparts.

Over the last few weeks, I have met several women entrepreneurs who are doing amazing work in the entrepreneurial world. I listened to women entrepreneurs and got motivated from their amazing journey of struggle.

I was truly inspired by the struggle of the first generation women entrepreneurs in Nepal. I know, women still face problem from their very commencement of enterprise in Nepal. The society still does not believe in their capacity and even their own family does not want to invest their capital in the business run by women due to lack of confidence in the women’s ability to run a venture successfully.

Yet, they are doing very good especially in Small and Micro Enterprises (SMEs) field. Currently, women own about 14,300 small and medium enterprises in Nepal, accounting for 2 percent of GDP (registered formal sector) and employing over 200,000 workers. A study commissioned by International Finance Corporation (IFC), private sector lending arm of the World Bank Group, suggests that meeting their current credit requirements of US$ 106 million can increase their contribution to the economy.

Long Journey

The other day, I spoke with Hajuri Bista, a first generation women entrepreneur in Nepal. Business was men’s domain even few decades ago, she says. You know people used to laugh at women who were in favor of setting up venture, she shares her experience. Entrepreneurship was a male preserve and the idea of women taking up entrepreneurial activities was considered as a distant dream, she adds. Continue reading Women Entrepreneurs in A Country Where Business was Men’s Domain→

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Dominic O’ Neill on his last day in office as Head of DFID Nepal. Pic by Amish

By Siromani Dhungana
UWB

At one point on his last day in office as head of DFID Nepal, Dominic O’ Neill was waiting for reporters. And a photographer.

“So, you guys want to take a picture?” He said as he fixed his tie. “This will probably be the last meeting with journalist in my nearly two years of stay in Nepal.”

“Tomorrow,” he said on Friday, “I will be leaving this beautiful country. I will never forget this land. Be it Humla, Mustang, the Tarai or Hilly belt, my desire to visit all the parts of the country will always remain the same. This county will always stay fresh within my heart.”

In an hour long conversation with us (friends Gaurav Aryal and Amish), Dominic addressed a range of issues- from donors’ role in Nepal to socioeconomic situation. What Dominic says as head of DFID Nepal is important because the UK aid agency, called Department for International Development (DFID), is currently the largest bilateral donor in Nepal. DFID “disbursed £55.9m of bilateral development assistance” in Nepal in fiscal year 2012/13. The UK also “disbursed £3.56m as debt relief.” According to DFID Annual Report and Accounts, UK aid to Nepal for the FY 2012-13 was divided into several sectors: Continue reading A Conversation with Departing Nepal Chief of the UK Aid Agency→

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IMF working paper on ‘VAT Fraud and Evasion: What Do We Know and What Can be Done?’ says: Like any tax, the VAT is vulnerable to evasion and fraud. But its credit and refund mechanism does offer unique opportunities for abuse… After introduction of Value Added Tax (VAT) revenue in 1997, Nepal’s tax administration has been facing many challenges to effectively implement it. Multi-million VAT fraud scam was one of the serious threats faced by Nepal’s tax administration. The scam has once again come to limelight after Nepal’s tax administration — Inland Revenue Department — has moved to the Supreme Court challenging the decision taken by National Information Commission which had directed the government to reveal the detail of VAT fraud.

VAT Fraud in Nepal

In fact, 518 firms were not taxpayer but fraudsters. They had not tried to evade or avoid their tax compliances. The case was more complicated in nature since the fraud, according to officials involved in investigation, could ruin the entire economic system of the country if tax administration had failed to identify the problem on time.

These firms had made false claims for credit and refund by presenting forged invoices for non-existent or exaggerated purchases and succeeded to take rebate from state coffer to the transactions which were never happened in reality.

Inland Revenue Department – had completed the investigation of 518 firms involved in Value Added Tax (VAT) scam that had tarnished the image of the private sector in April 2012. The department had assessed a total of Rs 6.59 billion revenue — Rs 3.06 billion VAT, Rs 3.32 billion income tax and Rs 205.27 million excise — from the investigation.

Concluding the investigation director general at IRD Tanka Mani Sharma had said: “the trend of under-invoicing, attempt to avoid VAT and producing fake VAT invoices by creating fictitious transactions have been found during investigations.” He had also said that traders, contractors and firms across the country were involved in robbing national coffers by producing fake VAT bills.

Debate: Revenue a Public Information or Not

From the very beginning, there was tussle between civil society members and tax administration regarding information of VAT fraud. On the one hand, civil society members advocated for the reveal of entire information claiming that getting tax information is peoples’ right to know. However, tax administration constantly denied the name of firms and businessmen to reveal citing Nepal’s Income Tax Act.

Later the dispute reached to the National Information Commission (NIC) which directed Finance Ministry to provide the detail information of VAT fraud in July, 2011.

Giving its final verdict in October 2011 to the complaint lodged by Freedom Forum, National Information Commission has directed the Finance Ministry to reveal the names of VAT evaders. Concluding that the people have the right to know about their tax amount, the commission directed the government to reveal the name of firms involved in VAT fraud.

A New Twist

Quite paradoxical that Nepal’s tax administration is trying to protect them under Income Tax Act and Value Added Tax (VAT) Act. Civil society members claim that this is a direct protection of VAT defaulters by Nepal’s tax administration.

Nearly two years after the decision of NIC, Nepal’s tax administration approached the Supreme Court on February 20 asking it to annul the decision taken by NIC regarding public disclosure of VAT scam.

Tax can never be an issue of public interest in Nepal and businessmen and officials at tax administration, from their attitude, are trying to prove that tax is collected due to their effort, opines Kathmandu-based revenue analyst Anirudra Neupane.

The question whether tax issue should be public or not has been raised after the move of the tax administration. Chairperson at Freedom Forum Tara Nath Dahal says: “It was not simply a scam of tax evasion or tax avoidance. Some big and reputed companies, traders and business firms had involved in Value Added Tax (VAT) fraud producing counterfeit invoice. They produced fake invoice and claim refund to the transaction which were never happened in reality.”

General public are real taxpayers and they have right to know the status of their tax money, adds Dahal. But, tax administration in Nepal is trying to establish the notion that tax is not an issue of public disclosure by challenging the decision by NIC.

In spite of criticism from different quarters to prosecute criminal charge against businessmen and firms involved in the biggest robbery of state coffer, Nepal’s tax administration has been constantly protecting VAT defaulter invoking Income Tax Act which is not natural, says Dahal.

Gravity of the Issue

“Using fake VAT bill is a serious crime that equals to using fake currency notes,” former Finance Minister Bharat Mohan Adhikari had said during interrogation by then parliamentary Public Accounts Committee in March 2011.

The government should respect taxpayers but not fraudsters, according to Krishna Sapkota who has been closely observing VAT scam. The move of Inland Revenue Department has raised the question of role of Nepal’s tax administration.

In principle, the government should spend tax money in transparent manner but the latest move of IRD will be a stumbling block to civil society’s campaign of making tax issues transparent, says Sapkota.

Even poorest of poor people contribute taxes to government’s treasury, adds Sapkota. How the tax administration can protect the persons involved in cases which, according to responsible minister, is equal to produce fake currency.

If revoked from the Supreme Court, it will be serious setback to Nepal’s Right to Information movement, according to him.

Solution: Reform in System

Transparency and accountability should be at the core within the tax system in democratic country. The government should respect and protect taxpayers but not fraudsters. For that, national tax law and policy should be transparent. Public disclosure of tax will help reduce tax related fraud and maintain transparency in tax regime. Greater tax disclosure will create a fair and sensible approach in tax system. Transparency in tax should be in center of debate in Nepal’s tax policy and governance. The government should take the discourse created by VAT scam to bring about reform in VAT regime in the country. However, the government should not forget that it should be responsible to the real taxpayers. Accountable government should treat all taxpayers equally and tax administration should not act in a manner where public can feel discrimination between rich and hardcore general public. In fact, tax money is public money and all citizens has right to know on its spending.

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Political instablity and power outage are the two major contributors to Nepal’s poor investment climate, a World Bank report says. It forget to mention the number one reason: the Maoists.

Nepal 2009 Enterprise Survey points out lack of access to finance and labour regulations as other major obstacles. Obstacles, however, differ from industry to industry. Transport and electricity are especially problematic for the tourism industry, whereas labour regulation is the key impediment for the manufacturing sector. The survey conducted last year has covered 13 cities across the country. Nepal’s decline in export has rightly been potrayed in the survey. Only four percent of the firms are exporters against the South Asian average of 20 percent. Nepal, however, has fared better in some areas: Tax rates, tax administration, business licensing and permits and court functioning. (detail)

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Many aggressive companies are staying away from Nepal, thanks to poor security situation. The power majors are considering of huge investment in Hydropower sector to export power to the power hungry states of India and China, and this is good news for Nepal. A country with very high hydro-power potential has one of the costliest energy, which simply is not acceptable. Nepal needs to reform the energy sector and prepare the base for development.

While the companies like Samsung, Kodak, LG, Kia etc have entered Nepal, their performance has not been very good in the past. The things are likely to change when Maoist are in the government. Many more companies are likely to follow the investment in this Himalayan country provided the early movers succeed. There are multiple reasons why companies would like to invest in Nepal:

1. Favorable Location: Nepal is a country between India and China, two fastest growing economies globally.

2. Power Sufficiency: Nepal is power rich (hydropower potential is more than enough for any future growth in economy).

3. Pleasant Climate: Nepal has one of the best climate on the world. The valley cities of Kathmandu, Pokhara, Surkhet and Dang are the front runners for this. Eastern city Dharan and western city Butwal are other places with comfortably moderate climate in the likes of Indian Silicon Valley, Bangalore. Continue reading TEN Reasons to Invest in Nepal→

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A press statement issued by Nepal Rastra Bank said that food and beverage prices shot up by 13.4 percent while non-food and service rates were up 12.7 percent.

Propelled by a remarkable rise in the prices of food and non-food commodities, the rate of inflation during the first month of the current fiscal year climbed to an alarming 13.1 percent from 6.3 percent recorded during the same period last year. A press statement issued by Nepal Rastra Bank said that food and beverage prices shot up by 13.4 percent while non-food and service rates were up 12.7 percent. Of the items showing a double-digit price rise, the price indices of oil and ghee increased by a whopping 36 percent in mid-August 2008 compared to an increase of 11.4 percent a year ago, said the release. Likewise, the sub-group of grains and cereal products witnessed a rise of 23.5 percent in mid-August 2008 while the prices of rice and rice products increased by 27.8 percent compared to an increase of 7 percent a year ago. Continue reading Bad Ass Economy: Inflation Soars to 13pc→

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The reactions to the budget from the nation’s policymakers and critics are often guided by four motives. Those who made the budget in the past regard it as imbalanced and untenable and heap praise on their own budget. Others who suffered defeat in the CA polls from the Maoists are scared of the perpetual marginalization that stares them in the face and wish to see their Maoist rivals failing and faltering on all fronts and to stand thus vindicated. Another group of intellectuals, those affiliated to political parties other than the Maoist, appear inordinately critical in expounding their techno-statistical expertise on the budget and dub it as overtly ambitious and populist. The Maoists and the intellectual professionals close to them, however, claim the budget as a historical document, regarding it to be achievable, pro-poor, and growth-oriented, and blame their critics as feudal-minded. The donors, in general, remain neutral, at present, and the people are waiting for the budget to deliver in the field. For, that is where its ultimate test will lie. Continue reading Maoist New Nepal: Industrial Capitalism Covered by Socialism→

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